by Kim Hjelmgaard, USA TODAY

by Kim Hjelmgaard, USA TODAY

LONDON - The Canadian-born governor of the Bank of England waded for the first time into the debate over Scotland's proposed independence, but insisted Wednesday that his was a "technical" assessment only over floated plans to share the pound.

In a speech in Edinburgh, Mark Carney, who took over the reins as the first foreign born chief of the 319-year-old central bank in July last year, replacing Sir Mervyn King, said that "careful consideration" was necessary were Scotland to break away from the United Kingdom yet seek to retain currency union.

Carney was careful to avoid politics.

"I will stick rigidly to what Thomas Carlyle described as the dismal science," Carney said, introducing his comments. "Any arrangement to retain sterling in an independent Scotland would need to be negotiated between the Westminster and Scottish Parliaments. The Bank of England would implement whatever monetary arrangements were put in place," he said.

However, "if such deliberations were ever to happen," Carney said, who also warned onlookers that his speech would be technical in nature, "they would need to consider carefully what the economics of what the currency unions suggest are the necessary foundations for a durable union, particularly given the clear risks if these foundations are not in place."

The speech took place in Scotland's capital city at an event put on by the Scottish Council for Development and Industry.

Carney added: "The euro area is now understandably beginning to rectify its institutional shortcomings, but further, very significant steps must be taken to expand the sharing of risks and pooling of fiscal resources. In short, a durable, successful currency union requires some ceding of national sovereignty."

Carney said that the Bank of England was not in a position to comment on the wider economic implications of Scottish independence, were it to happen. "We are not here to pass judgment," he said.

Technically, the Bank of England is an independent institution not controlled by HM Treasury, but the top job at the central bank is appointed by Britain's Chancellor of the Exchequer, George Osborne, so Carney's remarks were being heavily scrutinized.

The prime minister's office said Wednesday that it was not a "great surprise" that the governor was interested in speaking about his views.

A separate statement released by HM Treasury following Carney's speech said: "Governor Carney today highlights the principled difficulties of entering a currency union: losing national sovereignty, practical risks of financial instability and having to provide fiscal support to bail out another country. This is why the U.K. government (has) consistently said that in the event of independence, a currency union is highly unlikely to be agreed. The Scottish government needs a Plan B."

Scotland is due to hold a referendum on whether it should remain part of the United Kingdom on Sept. 18, 2014, but Carney's remarks are significant because the issue of the British pound - specifically, whether an independent Scotland would be able to continue to use it - is one of the key disagreements between Scotland's First Minister Alex Salmond and British Prime Minister David Cameron.

Salmond, who met with Carney in Edinburgh Wednesday ahead of the speech, said: "Our proposals are soundly based on technical terms," adding that the governor was not arguing Wednesday whether the Scottish people would be better or worse off under independence. "That's a matter for the Scottish people ... What he will be doing is providing that technocratic assessment, and I look forward to that because the issues we have raised are ones that we have anticipated."

The Scottish National Party quickly praised Carney's "serious and sensible analysis of how a currency union can work in practice."

"Ultimately, as Mr. Carney makes clear, a Sterling area is a matter for the two governments to agree," Scottish Finance Secretary John Swinney said. "Such a shared currency area is the common sense position as it is in the overwhelming interests of both Scotland and the rest of the U.K."

Such an agreement would not be simple, said Monique Ebell, an economist at the National Institute of Economic and Social Research who is working on the economic issues of Scottish independence. Countries in a monetary union agree to support each other - and the U.K. economy would dwarf that of Scotland.

"Would a country the size of Scotland really be able to bail out the rest of the U.K.?" she said. "In theory, the insurance is a two-way street. In practice, it would likely be a one-way street."

The position of Scottish leaders is that were Scotland to achieve a "Yes" vote in the referendum, and most recent polling suggests that is not likely, keeping the currency union would be in both Scotland's and the rest of the U.K.'s interests. However, British Treasury officials insist that such an arrangement - allowing Scotland to keep the pound even though it would be a separate nation - would effectively be allowing one country to set the monetary policy of another.

Before his speech got underway, Carney, playing to the home crowd, spoke about how his own country owed a great debt to Scotland, saying that it was responsible for building many of the foundations of his native Canada.